Discipline and Spending Sprees

We all have problems with discipline from time to time, especially in the area of spending. Some people are forced to live from paycheck to paycheck out of necessity unable to add anything to savings. Others spend what they have without distinguishing between wants and needs pushing the consequences to the future.

When we hear news about government spending we expect some level of responsibility, assuming that new spending is necessary and productive and that going into debt to support that spending is a prudent choice.  But Americans rarely look closely at the numbers, taking the word of their favorite news outlet or economist as to the wisdom of these choices.

But looking into the numbers is not that difficult and the results should be surprising, even shocking to almost everyone – not because the numbers are unimaginably huge, billions and trillions, but because the perspective over 30 years is so revealing. It’s like raising children.  As a parent you don’t notice the children growing in the same way that a distant friend or relative, who looks at the latest Christmas card photo, does.  It sneaks up on you.

As I said, the numbers are easy to find.  My source is the Federal Reserve Bank of St. Louis.  They post on their website quarterly government expenditures and receipts, seasonally adjusted.  The graphs below represent a different look at each from 1^stQuarter 1990 to 1^stQuarter 2018.

The first graph shows government expenditures for that period.  What's striking is the apparent acceleration in spending shortly after 2001.

The next graph shows that the increase was real.  I took the average quarterly increase for the 1990 to 2000 period and applied it to the rest of the data. The red bars show the continuation of the trend as a percent increase – rather than as a straight-line trend, which would be lower.  The actual is now in blue.  The appetite for spending seems to have increased disproportionately.

Finally, when I apply government receipts, shown in green, it’s surprising that, even with the much-maligned tax cuts of 2001, had spending continued to increase at the same pace, there would have been another budget surplus from 2006 to mid-2008 just as there was at the beginning of the century, and we would have come very close to still another around 2013 – 2015.

Readers can draw their own conclusions. But perhaps we have a truly representative form of government where elected officials mirror the behavior of many citizens who cannot keep spending under control, acting as if the wants of today are more important than the needs of tomorrow.  Let our children and grandchildren worry about it.  (Keep in mind that the numbers on the x-axis are in billions of dollars!)